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Research and EvaluationThe Housing Experiences ofNew Canadians: Insights fromthe Longitudinal Survey ofImmigrants to Canada (LSIC)Michael Haan, PhDUniversity of New BrunswickMarch 2012The views and opinions expressed in this document are those of the author(s) and do notnecessarily reflect those of Citizenship and ImmigrationCanada or the Government of Canada.

Number of months for immigrants to acquire owner-occupied housing, LSIC

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Figure 3-2:

Home ownership attainment trajectories of Chinese, South Asian, Black,Filipino, and Latin American immigrants in the four years after arrival, LSIC

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Figure 3-3:

Home ownership attainment trajectories of South East Asian, Arab, West Asian,White, and other visible minority immigrants in the four years after arrival, LSIC

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Figure 3-4:

Home ownership attainment trajectories of Chinese, South Asian, Black,Filipino, and Latin American Immigrants in the four years after arrival, LSIC

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Figure 3-5:

Home ownership attainment trajectoriesof Korean, Arab, West Asian, White,and other visible minority immigrants in the four years after arrival, LSIC

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Executivesummary

This report outlines several aspects of the residential experiences of recent immigrants to Canada.It uses the Longitudinal Survey of Immigrants to Canada (LSIC) to document the experiences ofnewcomers as they learn how to navigate Canada’s housing market. After describing the historicalcontext of immigration in Canada in section one, section two elaborates on housing affordability,and how this varies by census metropolitan area, category of admission, country of origin,andvisible minority status.Most analysis in section two is broken down by owners and renters. Insection three, multivariate analysis is used to identify the factors that allow those that rented inwave

1 to become owners bywave

3. The report closes by discussing some policy implicationsand making some suggestions for future research.

Findings

By and large, the findings in this report suggest that immigrants settle in to the housing marketvery quickly, and although many face adversity in their early years, they appear to be determinedto not let these hardships prevent their residential mobility. In fact, after only four years mosthave overcome affordability constraints they may have initially faced; many haveeven purchaseda home, suggesting that they have also learnt how to navigate the mortgage and labour markets ofCanada.

Section one of the report

describes the LSIC and outlines the broad theoretical platform forunderstanding immigrant integration outcomes, like housing, in Canada. The work of earlyimmigration and housing scholars is described, followed by a descriptive analysis of the housingexperiences of immigrants in section two. For the most part, this section consists of a bivariateanalysis of shelter costs by housing-relevant characteristics. Following this, a multivariate analysisof the determinants of homeownership appears in section three. The motivation for studyinghomeownership as an outcome in this section is that homeownership remains the most popularhousing type in Canada, and as immigrants integrate into Canadian society, it is expected to bethe accommodation type that they will gravitate towards. Consequently, attainment ofhomeownership represents an important milestone in terms of residential and socioeconomicmobility.

Conclusion

Overall, this study presents a fairly positive story for one cohort of immigrants to Canada.Although nearly all newcomers face significant affordability constraints at time of entry, most areable to secure affordable housing during the four-year observation period available in the LSIC.Over half of all people that remain in the sample own theirhomes after only four years. Thislevel of progress is remarkable, and provides some affirmation that immigrants integrate intoCanadian society at a rapid pace.

Although the broad storyline is positive for LSIC respondents, there are some trends that warrantcloser attention in future research. First, affordability constraints appear to be acute for renters inOttawa, and for homeowners in Toronto and Vancouver, and although the housing market hascooled somewhat in recent years, it is likely that a significant proportion of newcomers in theselocations are dedicating more resources to housing than their counterparts in other parts ofCanada. This is likely to be true for all new housing market entrants in these cities, and not justimmigrants. Second, some visible minority groups also seem to have more difficulty in thehousing market than others, with West Asians standing out as particularly hard-hit. When broken2

down by country of origin, it is Africans and those from the Middle East that face the greatestaffordability constraints. There are also wide variations by category of admission, with refugeesfacing the greatest constraints.

One of the implications of this report is that although providing housing support andinformation to newcomers is probably important, it is immigrants themselves that are the primaryreason behind improvements in housing outcomes. Rents (as a proportion of income) dropquickly for most groups, homeownership rates ascend quickly, and shelter costs (for many)quickly fall in line with other people living in the same census metropolitan areas. This suggeststhat most newcomers to Canada are ‘making it’, much like their predecessors did, in the largely-private Canadian housing market. That is not to say that there aren’t hardships for themregarding other aspects of integration (such as the labour market), but that, remarkably,integration into the Canadian housing market proceeds despite these other hardships. What isinteresting, and ripe for future study, is elaborating on howmore recent newcomers do thiscompared to previous arrival cohorts. Are they relying more or less on extended familyconnections? Entry wealth? The conventional mortgage market? Although this reports providespartial answers to these questions, much work remains to be done.

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1.

Introduction: Immigration to Canada,past and present

1.1.

Introduction

In the past, most newcomers came to Canada from Europe. They sought the plentifulopportunities that existed here, such as employment opportunities, affordable real estate, andbetter lives for themselves and their children. Canada, like other immigrant destinations, was aland of opportunity, and attracted millions of newcomers with the promise of a better life.

Most of the time, those who uprooted their lives, and those of their families, to come to Canadafound what they were looking for; jobs were plentiful, housing was affordable, and people by andlarge welcomed them and their children. As a result, newcomers to Canada melded into Canadiansociety with relative ease, and found many of the opportunities they were hoping for.

By comparison, immigrants to Canada today differ in several important respects, as do theirintegration experiences. First, they are now largely non-European and predominantly non-white,which potentially distinguishes them from the host society over a longer term (Boyd 2003);second, they no longer stand on the doorstep of a ‘frontier-economy‘, so the opportunities ofyesteryear may not exist to the same extent that they did in the past; third,they hold differentmarket skills, and are therefore positioned differently in the labour market relative to theCanadian-born. These changes, alongside numerous others, are altering the processes ofimmigrant integration into Canadian society.

the Longitudinal Survey of Immigrants toCanada (LSIC) to look at housing, another central aspect of the immigrant settlement process.Although housing relates to both spatial and economic positioning in Canadian society, itcaptures facets of the immigrant experience that other factors do not. Housing, particularly ifowned, is a vital component of financial security (Alba and Logan 1992; Hou 2010). Second, it isfixed geographically, and looking at the type, quality, and location of a dwelling not only speaksto the spatial positioning of an immigrant household, but also its access to amenities (Henry1989). Finally, housing signifies an immigrant household’s commitment to their new communityand society (Alba and Logan 1992; Haan 2007). Housing therefore

represents a mechanism forgenerating (or preventing) socioeconomic stratification, capturing an element of the immigrantexperience that other outcomes cannot.

This report focuses on several housing characteristics of a recent cohort of immigrants in theirearly years in Canada. It looks at housing expenditures, residential pathways, and how newcomersthat buy a home in the early years are able to afford to do so. The structure of this report is as

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Several excellent papers have been written on housing and immigrants, some of them using LSIC. Given theexpanse of the topic of housing, however, several things remain understudied. This report fills

three of these gaps inthe existing literature.

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follows: first, the section below contains more detailed

information on how immigrants toCanada and their reception has changed over time, and how these changes might affect theirresidential experiences. Then, a detailed analysis of affordability appears, followed by a discussionof the correlates of ownership. The report concludes by discussing some policy implications.

1.2.

Canada’s changing immigrant population

Immigration researchers interested in understanding the process of integration into Canadiansociety are fortunate to have a long theoretical legacy to

draw upon, relying on research in bothCanada and the United States. In Canada, the work of John Porter and Burton Hurd areformative, whereas early US researchers like Robert Park and Ernest Burgess largely based theirconclusions on the experiences of immigrants who arrived in their host country in the late 1800sand early 1900s. This work focuses on the largely poor and uneducated migrants that chose tosettle in a handful of Canadian and US cities. These newcomers were ‘hand-picked’ from a shortlist of countries, and as a result, were fairly homogenous, at least when compared to immigrantstoday.

By and large, the expectation for these newcomers was a gradual process of diminishingdifferences from the mainstream population. In the words of Park and Burgess, the expectedtrend was:

a process of interpenetration and fusion in which groups acquire the memories, sentiments and attitudes of otherpersons and groups and, by sharing their experience and history, are incorporated with them in a common culturallife.

(Park and Burgess, 1921: 735)

Although not referring to any one outcome in particular, this early work is paradigmatic, and hassince then been used by countless researchers to help them understand how immigrantsincorporate into their host society.

As mentioned above, however,

these early theories were based on the experiences ofpredominantly white European migrants, who were, for the most part, physicallyindistinguishable from their host society. Beginning in the 1960s, most immigrant receivingcountries (including Canada) began to drop their country-specific immigrant-intake policies infavour of ones based on merit and humanitarian concerns (see Rekai (2002) or Borjas (1991) fora review of these policies). One of the major consequences of this change has been a movementaway from Europe to the rest of the world as the primary source for new immigrants, greatlyincreasing the proportion of non-white immigrants (Figure 1-1).

0%10%20%30%40%50%60%70%80%1971198119912001BlackChineseFilipinoSouth AsianWhiteOther OriginsSource:1971-2001 Census of Canada Household Files created by author.Note: Refers only to families where highest earner (head) is age 25-54, and arrived 5 years ago or less. Visible minoritystatus in 1971 was imputed by using similar methods to those used by Statistics Canada to impute 1981 status.

As Figure 1-1 shows, in 1971 (the first year in which Europe was supplanted by the rest of theworld as the source for Canadian immigrants (Troper 2003)), approximately ¾ of all recent (≤ 5yrs) Canadian immigrants were white. Over the next 20 years, however, this proportion declinedsteadily, so that by 1991 only about ¼ of recent arrivals (those that arrived in 1986-91) werewhite, with sizeable Black, Chinese, and South Asian populations making up the difference. Thisproportion has remained approximately stable since then.

Several researchers (Myles and Hou 2004; Zhou 1997; Boyd 2003) believe that the changes in the‘colour’ of immigration shown in Figure 1-1 above may result in different integration experiences.Unlike the original theoretical formulations mentioned above, where the forces of change can beexpected to eradicate divisions between immigrants and the host society (Hirschman 1983), thediversity of new immigrants challenges theoretical orthodoxy by introducing the prospect oflong-term structural/institutional barriers to the life chances of new arrivals.

The primary motivation for reconsidering baseline theories is that immigrants of the past werelargely identifiable by cultural and linguistic, but not physical, differences. Now, in addition tothese ‘secondary barriers’ (Murdie et al. 1999) are more enduring physical, or ’primary’, barriers topermanently distinguish immigrants from the native-born. Consequently, even after adopting theconventions of the host society, many immigrants today can be distinguished from their (stillpredominantly white) Canadian-born counterparts. At the same time, visible minority populationsare growing rapidly, and are expected to more than double by 2031. In Toronto, this will meanthat visible minorities will together outnumber the non-visible minorities. This is further reasonto reconsider the integration frameworks of the past.

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Although a considerable amount of the research on the immigrant experience today focuses onskin colour (‘visible minority status’ in Canada, or ‘race’ in most other countries), this is by nomeans the only thing that is ‘new’ about immigrants today. New immigrant entrants can beclassified by their age, categories of admission, levels of education, income, wealth, and sourceregion.

As this relates to housing, several questions emerge. First, do immigrants to Canada today havedifferent residential experiences, based on their growing diversity? Second, if housing outcomesdiffer, can they be explained by factors that co-vary with the distinguishing features mentionedabove or are differences explained by factors such as culture and preference? Finally, do theresults support or detract from traditional integration expectations? Although this report will onlybe able to partially answer these questions, and for only one immigrant arrival cohort, theymotivate the entire report. Descriptive results in section two are organized according to these‘new’ aspects of diversity, whereas section three will identify the impact of all of these factors in amultivariate framework.

1.2.2.

Changes in Canada’shousing market

When studying housing, it is necessary to also look at the host of market-levelfactors that affectthe experiences of Canadian immigrants. Key among these is government policy around issueslike down-payment requirements and mortgage lending rates. Policies like theNational HousingAct

(NHA), which launched an effective public housing program (1964), an assisted homeownership program (1973), a housing rehabilitation program (1973), and a non-profit and co-ophousing program (1973), directly affect Canada’s housing market, by providing affordable optionsto home-seekers.

In more recent years, many of these supportive policies have been withdrawn, making Canada’shousing market one of the most private of any liberal democracy (Hulchanski 2006). Althoughthere are supportive policies in place, like the First-Time Home Buyers' (FTHB) Tax Credit, theHome Renovation Tax Credit (HRTC), and the Home Buyers’ Plan (HBP), these incentives areunlikely to shape the buying behaviour of newcomers for several reasons. The FTHB creditprovides first-time buyers with a tax credit of up to $750 to help defray the initial costs ofpurchasing a home (legal fees, disbursements and land transfer taxes, etc.), and it is likely to betoo small to dramatically affect the decision to buy versus rent. The HRTC is designed to softenthe costs of a renovation, thereby impacting homeowners only, not those contemplating apurchase. The HBP allows first-time homebuyers to withdraw up to $25,000 from their CanadianRRSP contributions and use the amount for a down-payment on a new home. Since newcomersto Canada haveprobably not had an opportunity to build RRSPs in Canada, they will likely notbenefit greatly from the program. Given that these are the three primary housing policies inCanada, it is fairly safe to say that most immigrants must rely primarily on the private market tosatisfy their housing needs with little governmental assistance. Furthermore, these policies do notprovide support for immigrants (or anyone else) who does not want to buy a home, or upgradeone that they already own.

1.2.3.

Changes in Canada’smortgage market

Although housing policies may not affect the immigrants in the LSIC sample, mortgage rateslikely will. Mortgage rates have fluctuated dramatically in recent history (Figure 1-2), and have anappreciable effect on housing affordability, andan immigrant household’s decision to buy versusrent.

To illustrate with an example, for a $200,000 home (25-year amortization) with a 7% interest rate,monthly mortgage payments would be roughly $1,400 plus property tax and utilities. A similarlypriced home at 18%, which is what rates spiked at around 1981 (Figure 1-2), would be $2,930, ormore than twice the amount under a 7% interest amount.

Clearly, immigrants that arrived under one mortgage interest rate regime would have had verydifferent experiences in Canada’s housing market had they come under another, as would all newbuyers. To further hamper affordability, the home that would have been purchased in 1981needed a minimum 10% down-payment, a requirement that has been relaxed in recent years.Furthermore, mortgage interest rates have remained fairly stable in recent years, and since theLSIC sample more or

less entered Canada at the same time, they face similar, historically low,interest rates. As this relates to expectations of integration, we might expect that this will benefitanyone interested in buying a home that does not have the money to buy a home

outright.

Offsetting the positive effects of historically low interest rates are increases in the price ofhousing itself. Although certainly not everyone wants to own their home, those that do havefaced a deterioration in affordability over time (Figure 1-3).

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Figure1-3:

Owner-occupiedhousing prices, Toronto, 1966-2011

$-$50,000$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000DeflatedSource: www.torontohomes-for-sale.com/4a_custpage_2578.htmlNote: Y-axis refers to average price in 2010 dollars, and x-axis refer to the years for which data are available.

As Figure 1-3 shows for Toronto (where roughly 40% of all immigrants to Canada have settled inrecent history), the price of housing has been steadily

creeping up since at least 1966. Althoughrecent trends in mortgage interests have mitigated against this increase somewhat, there has stillbeen long-term decline in the affordability of owner-occupied housing. This not only shapesaccess levels for new buyers, but even for those that wish to remain

tenants.

The trends abovecontribute to an affordability crunch, since rents usually increase alongside owner-occupieddwelling appreciation (OECD 2005). Housing price trends over time therefore provide anindication of what is happening in the rental market (Arnold and Skaburskis 1989).

As this pertains to immigrants in the LSIC sample, Figure 1-3 shows that immigrants now live inmore expensive housing (owned and rented) than they did in the past. Given that this is the case,households that rent uponarriving in Canada may have more difficulty saving funds for a down-payment than they did in the past, suggesting that transitions to ownership will be more gradualthan it was in the past. Although this is true in Canada generally, several metropolitan housingmarkets have particularly experienced general declines in affordability. Top among these locationsare Toronto and Vancouver, the two top destinations for immigrants in the LSIC sample andimmigrants more generally (Hou 2007). At the same time, LSICrespondents that choose to buyreceive some of the lowest mortgage interest rates of the past 50 years (Figure 1-2), offsettingsome of the price increases demonstrated in Figure 1-3, and suggesting that they may beprompted to buy because borrowing moneyis now ‘cheaper’.

1.3.

About the Longitudinal Survey of Immigrants to Canada2

As part of adapting to life in Canada, many immigrants face challenges such as finding suitableaccommodation, learning or becoming more fluent in one or both of Canada's official languages,participating in the labour market, accessing education and training opportunities, and securing

2

This section is a revised version of the description that appears on Statistics Canada’s LSIC website, available at:www.statcan.gc.ca/cgi-bin/imdb/p2SV.pl?Function=getSurvey&SDDS=4422&lang=en&db=imdb&adm=8&dis=2

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appropriate accommodations. The results from the Longitudinal Survey of Immigrants to Canada(LSIC)provide indicators of how immigrants are meeting these and other challenges. Whileintegration may take many years, the LSIC is designed to examine the first four years ofsettlement, a time when newcomers establish economic, social and cultural ties to Canadiansociety. To this end, the objectives of the

survey are two-fold: to study how new immigrantsadjust to life in Canada over time, and to provide information on the factors that can facilitate orhinder this adjustment.

The Survey was designed to provide information on how new immigrants adjust to life in Canadaand to understand the factors that can help or hinder this adjustment. The data allow researchersto evaluate the current services available and help improve them. Topics covered in the surveyinclude language proficiency, education, foreign credential recognition, employment, health,values and attitudes, the development and use of social networks, income, and perceptions ofsettlement in Canada.

As it pertains to housing, there is considerable information on affordability, suitability, andappropriateness, making it an excellent resource for studying this aspect of immigrant integration.Researchers can use the data to look at the residential experiences of immigrants at time ofarrival, and how these experiences change over time spent in Canada.

1.4.

LSIC andgeneralizability

Except for some native-born comparison data from the census, this report relies almostexclusively on the LSIC as a data source. LSIC is a three-wave

study of 12,040 people aged 15and over (atwave

1) who were randomly selected from the approximately 165,000 immigrantswho settled in Canada between October 2000 and September 2001. Respondents wereinterviewed at six months, 2 years, and 4 years after arrival, and to be part of the LSIC sample,respondents needed to have applied for admission to Canada through a mission abroad (StatisticsCanada 2003).

The LSIC sample was created using a two-stage stratified sampling method. The first stageinvolved the selection of Immigrating Units (IU) using a probability proportional to size method.The second stage involved the selection of one IU member within each selected IU. The selectedmember of the IU is called the longitudinal respondent (LR). Only the LR is followed throughoutthe survey. This report reduced the full LSIC sample to

contain only respondents with validinformation on housing variables of interest, removing roughly 100 observations from the 7716respondents that were present in all threewaves of the sample.

Although an excellent dataset, there are some limitations with LSIC that are worth noting. First,attrition rates are noteworthy, with only 9500 and 7716 people participating inwaves 2 and 3respectively (down from 12,040 inwave

1). One of the consequences of sample attrition is thatthere may be a growing bias in the sample acrosswaves. This could be especially true whencomparing across immigrant classes where refugees can hardly return to their country of origin ormove on to

another country, where economic classes can, which may exaggerate differences.Even though Statistics Canada adjusts weights to maintain representativity, there is likely to beunobserved differences between those that remain in the sample and those thatdo not. Inaddition, it is difficult to know the proportion of respondents who dropped out because theyhave returned to their country of origin or re-migrated to a third country, or whether they haveremained in Canada and cannot be traced. This report looks only at respondents who werepresent in all threewaves and readers are urged to keep this in mind when reading the results.

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Unlike some Statistics Canada surveys, LSIC does not permit proxy interviews. The oneexception to this is the module on income, where the person in the household (whether or notthey are the respondent for the rest of the survey) most knowledgeable about the subject is askedto respond. Otherwise, no interview may be conducted by proxy. The recorded values are basedon the interviewee’s response, and no information is taken from other data sources (such as taxrecords). Some consistency editing occurred with income responses, but were largely limited toinstances where individual income exceeded economic family income, or of partial non-response.

There are other factors that potentially complicate how representative LSIC is. First, onlyGovernment Assisted and Privately Sponsored Refugees (not successful asylum seekers)compose the Refugee category in LSIC, thereby omitting a portion of Canada’s total number ofrefugee claimants.

Additionally, LSIC contains information on one arrival cohort, and it would be presumptuous toassume that the findings from this unique sample apply equally to those that arrived before orafter LSIC respondents. At the same time, there are no doubt insights to be gained from thissample that will hold some relevance for immigrants today.

In summary, LSIC is Canada’s pre-eminent source for data on the dynamics of settlement, andrepresents an importantresource for understanding an immigrant’s early years, including theirhousing experiences. In section two below, we first look at housing affordability among LSICrespondents, before trying to explain differences between groups in section three. The primaryfocus in section two is on housing costs, and whether this amount differs by ownership status,census metropolitan area, visible minority status, and category of admission.3

1.5.

Anote on the unit of analysis

Although housing outcomes can be linked to individual characteristics (gender, income, maritalstatus, etc.), most times it is more useful to think of it as a household-level resource, suggestingthat it is household level factors that should be used to explain housing outcomes. Quite often, itis families (however defined) that make residential choices, and it is often also these people thatcontribute payments for the dwelling. Given this, very little information between individualcharacteristics and housing is provided in this report.

For the same reason, income is not measured at the individual level but rather that of the level ofthe economic family, where an economic family is defined by Statistics Canada as

a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage,common-law or adoption. A couple may be of opposite or same sex. Foster children are included. By definition,all persons who are members of a census family are also members of an economic family. Examples of the broaderconcept of economic family include the following: two co-resident census families who are related to one another areconsidered one economic family; co-resident siblings who are not members of a census family are considered as oneeconomic family; and, nieces or nephews living with aunts or uncles are considered one economic family.4

There are some necessary exceptions to looking at household characteristics. Visible minoritystatus and source region are not measured for each household member, but only for thelongitudinal respondent in the LSIC. Given the policy interest in differences across thesegroupings, however, the characteristics of the longitudinal respondent are assumed to representthe entire household.

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Additional information about LSIC and variables created from the file appear in Appendix A,B, andC.

4

Taken fromwww.statcan.gc.ca/concepts/definitions/economic_family-familles_economiques-eng.htm

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All dollar figures in this report are stated in 2002 dollars, adjusted using the Bank of Canada’s2002 Total CPI deflator5

. All other coding information for the variables used in this report canbe found inAppendixC.

1.6.

Anote on terminology

For the purposes of style and brevity, several terms are used interchangeably in this report. First,LSIC respondents were interviewed three times: after roughly six months in Canada, then againafter two and four years. Since it would be cumbersome to describe the interviews according tothe amount of time that has elapsed for a respondent in Canada, these interviews are at timesoften referred to in shorthand aswaves 1, 2, and 3. Also, since LSIC contains some retrospectiveinformation on experiences and resources immediately at arrival, there is essentially anothersyntheticwave

of data for time at arrival. This syntheticwave

is referred as ‘wave

0’.

Second, assimilation, incorporation, integration, and settlement are used as parallel terms in thisreport. In Canadian immigration research, the primary convention is to

use ‘integration’ in placeof synonyms (particularly assimilation). Third, an affordability constraint is defined as anysituation where an economic family is spending more than 30% of its total income on shelter.This definition is consistent with that of Statistics Canada6

and the US census bureau7, and istherefore often used in housing research.

Finally, ‘household’ is used to refer to economic family. Ideally, more information would bemeasured at the level of the household (particularly financial information) instead of theeconomic family in the LSIC even though households and economic families are often verysimilar in composition. Once again, the term ‘household’ is used to improve the flow of thereport, even though there are some (instances where

As mentioned earlier, under traditional theories of immigrant integration, newcomers areexpected to be increasingly indistinguishable from their host society over time, due to a ‘give-and-take’ process that brings them closer to the host population. That is not to say that immigrantswon’t experience some difficulties upon arriving in a new country, or that they will becomeentirely indistinguishable from Canadians overall, but that they are likely to encounter challengesinherent to navigating a new labour market, housing market, society, etc. What is central in theseaccounts is that initial difficulties do not persist beyond this transition period. Over time,challenges will subside, and immigrants will increasingly enjoy access to the benefits that otherCanadians enjoy, including a ‘comfortable home in a good neighbourhood’ (Murdie and Teixeira2002).

As also mentioned earlier, several

scholars question the prospect of equal opportunity andattainment as a universal endpoint, arguing instead that, no matter how much time elapses, somegroups never fully converge with mainstream society (Murdie et al. 1999; Lee and Bean 2004;Hulchanski1993; Henry et al. 2000). They instead argue for segmentation, where groupsexperience different modes of incorporation or contexts of reception based on their physicalcharacteristics (Portes 2005; Boyd 2003; Myles and Hou 2004).

As segmentation relatesto housing, the means by which markets are restricted could rangewidely, but may include higher mortgage cut-offs (Gyourko, Linneman, and Wachter 1999),inflated house prices (Henderson and Ioannides 1986; Ihlanfeldt 1981), or restricted orchannelled housing markets (Yinger 1998, 1986; Galster 1990). Although the mechanisms forlimiting opportunity could vary widely (and most derive from US research), the outcome will bethe same: a lack of convergence with Canadians overall.

With this literature as a backdrop, the primary focus of this section is to elaborate on how muchimmigrants spend on housing (owned and rented) in Canada, and how this changes in the firstfour years of settlement. The primary guiding questions for this section are as follows:

1.

How much do immigrants pay per month in rent/housing costs (e.g., as a proportion ofhousehold income)? Does this amount (as a proportion of household income) increase ordecrease with time spent in Canada?

2.

Does this vary by location? Visible minority status?Country/Region of origin? Category ofadmission? Level of education? Age?

2.2.

How much do immigrants pay per month in shelter costs?

For immigrants and the Canadian-born alike, housing is likely one of the largest expenses thathouseholds incur on a continual basis. Given this, and that housing is a basic necessity,households must dedicate a portion of their financial resources to housing. The differences thatexist stem from theamount

spent on housing, and the type of housing that is used, not whether ornot an immigrant household chooses to spend money for accommodation.

At the same time, housing is a fixed entity, and the amount a household chooses, or is able to, tospend on housing partially determines their access to amenities, the quality of their surroundings(schools, parks, community organizations, etc.), and the people they come into contact with.13

Consequently, it is useful to identify how much immigrants spend on housing, because it servesas an indicator of their social and economic position inCanadian society. Looking at trends overtime allows for an assessment of how this positioning evolves. Table 2-1 provides thisinformation for LSIC respondents

This table shows that there is a steady increase in housing costs over time (all values are stated in2002 dollars), suggesting that immigrants are gaining access to better amenities as their time inCanada increases.

The potential explanations for the increase over time are multiple, but a leading contender forrising shelter costs is the more than doubling of home ownership rates over the period. This tableshows how quickly many immigrants are able to move into a dwelling they own, with homeownership rates of 50.8% after only about four years in Canada. This impressive acquisition rateis actuallyfaster

than it was in the past (Haan 2007), and suggests that many immigrants are deftlynavigating the Canadian housing market.9

The implications of this trend are further discussedlater in the conclusion of this section.

Table2-2:

Median shelter costs ($2002) for owners and renters, LSICwaves 1-3

6 Months2 Years4 YearsRenters764776741Owners1,5431,4621,494Ratio of Renter to Owner Costs0.490.530.50Source: Longitudinal Survey of Immigrants to CanadaNote: All dollar values are stated in 2002 dollars

This movement into ownership is especially remarkable when the cost differences betweenowning and renting are considered. Table 2-2 shows that households living in rentedaccommodations spend roughly half of what those that own do at all points in time. Althoughthe cost waxed and waned over the four-year period, and ended lower than it started, the relativecost of renting versus owning were fairly constant over time. As such, the transitions toownership were not based purely on immediate economic considerations/affordability issues–

ifthey were, more LSIC respondents would have remained renters, since the initial savings marginwas carried forward entirely over time.

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Shelter costs for owned dwellings include mortgage payments, property taxes, condominium fees, and utilities(electricity, heating fuels, water and other municipal services). For renters, they include rent and utilities.

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It is important to recall that this is likely an example of where sample attrition affects the widespread applicability ofthis statement. Sinceit is likely to be those that succeed in Canada that choose to stay and to participate in thesurvey, rapid attainment rates like those above are probably biased toward the successful. Second, the question thatmeasures ownership status changed slightly over time, from a self-reported measure in wave 1 to a derived measurein waves 2 and 3. LSIC concordance tables (Statistics Canada 2007) and Statistics Canada methodologists affirm thecomparability of measures over time, although it is difficult to be certain what effect a change in question wordingwill have on a longitudinal trend.

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For renters and owners alike, however, it is difficult to speculate on how much tenure choicereally

costs without also looking at income. Accompanying wealth and savings also play a part inthis assessment. If the increase in shelter costs for owned dwellings occurred alongsidesubstantial increases in income for homeowners, for example, then the relative costs for rentersmay have actually increased over time compared to owners, despite the relative stability shown inTable 2-2.

Unfortunately, the LSIC does not contain consistent monthly income information forrespondents. Forwave

1, respondents reported the income they earned between their landingdate and interview date, whereas inwaves 2 and 3 they reported their income for the previous 12months. By dividing thewave

1 figure by the number of months a respondent has been inCanada, and dividing thewaves 2 and 3 data by 12, it is possible to get an estimate of the ratio ofshelter costs to income. Although imperfect, it is difficult to generate any other affordabilityfigurefor renters and owners in LSIC.10

In Table 2-3, what could be interpreted as a difference in affordability between owners andrenters in Table 2-2 shrinks considerably when read alongside income differences. Renters tendto earn much less than owners, so the affordability differences are not as great as they initiallyappeared to be in Table 2-2. One exception to this is inwave

1, where renters and owners bothspend

over half of their income on shelter. Readers should interpret this with caution, however,since it is possible that many respondents relied on other sources (such as savings) rather thanincome to pay their housing costs. Already bywave

2, however, theratio of income to sheltercosts shrinks considerably for both groups, but especially among renters, suggesting thataffordability constraints is a short-term issue for many newcomers (though certainly not all).

As mentioned above, one major reason for such high shelter costs atwave

1 is likely that manyimmigrants may not work immediately upon arrival to Canada, and that as a result they musteither use their savings or incur some debt until they can secure a new source of income. Theymay also be relatively unfamiliar with the local housing market and over time gain informationthat allows them to reduce their housing costs (especially for renters). It would be important toidentify more about what occurs in the early months, but unfortunately LSIC containsincomplete information for such an analysis. For example, although questions were asked aboutentry wealth inwave

1, respondents were not asked how much of this money remained after twoand four years in Canada (only savings in other countries were asked about). Additionally,

10

Previous attempts to use LSIC to measure affordability use the suite of variables (HS1D119, HS2D119, HS3D119)that identify the proportion of family income that a householdspends on housing. This information is only asked forrenters, however, and does not provide any information on owners.

15

respondents were asked if they used savings to help them through bouts of unemployment, butthey were not asked how much of their savings were used. Consequently, it is possible to respondpositively when asked about using savings even though minimal savings were actually used.

It is also important to note that the values presented in Table 2-3above and later in this reportdiffer from the more commonly-used Average Shelter-Cost-to-Income Ratio (STIR). STIR refersto the proportion of total before-tax household income spent on shelter. The Shelter-cost-To-Income Ratio is calculated for each household individually by dividing its total annual shelter costby its total annual income. The average STIR is then computed by taking the average of theindividual households' shelter to income ratios. STIR is not calculated by dividing the averagesheltercost by the average income of the economic family (which may or may not includeeveryone in a

household)11, as is done here. Since the LSIC mostly contains information onincome of the economic family (it does not have income information for every household

member), the STIR could not be used here and a proxy was created (based on the economicfamily and not the individual), even though the numbers should be very close to one another.

2.3.

Comparisons with Canadians overall

A considerable body of research in Canada (Haan 2007; Rea et al. 2008; Skaburskis 1996; Ley2007) compares the housing success levels of immigrants relative to the overall Canadianpopulation. The broad consensus of this research is that by and large immigrants flourished inCanada’s housingmarket at one time. They moved quickly into homeownership, bought intoappreciating housing markets, and, in the process, accumulated considerable housing wealth.More recently, however, the research shows that residential outcomes have been more mixed(even though Table 2-1 shows considerable progress for LSIC respondents). Although somegroups, most notably the Chinese, continue to do well in Canada’s housing market, many othersdo not, producing a more pronounced bifurcation of housing ‘haves’ and ‘have-nots’ (Myles andHou 2004).

As a useful backdrop for the current study, the use of Census data and inter-cohort comparisonspermits a broad and useful comparison of trends over time (particularly between immigrants andthe Canadian-born). However, a lackof detailed information on wealth and householdarrangements does not enable an analysis of the many determinants of residential success as ispossible with the LSIC. The LSIC, therefore, permits research on topics of immigration andhousing that have never been studied in Canada (such as the effect of entry wealth on residentialoutcomes). One disadvantage of using LSIC is that it does not permit a direct comparison witheither the Canadian-born or Canadians overall.

That said,

it is important to compare the results from LSIC respondents to the Canadianpopulation to the fullest extent possible because of the wide differences that exist in shelter costsacross Census Metropolitan Areas (CMAs). In this section, the LSIC sample is

first compared toCanadians overall, regardless of whether they own or rent, then the LSIC sample is divided intoowners and renters by CMA. Ideally, the LSIC sample could be compared to Canadians byhousing tenure type at each time point, but data limitations prevent this comparison (we mustrely on the census, which only has data for 2001 and 2006). Instead, overall comparisons will firstbe made by CMA, followed by a dwelling type by CMA for LSIC respondents only.

11

Economic family refers to a group of two or more persons who live in the same dwelling and are related to eachother by blood, marriage, common-law or adoption. A couple may be of opposite or same sex. Foster children areincluded.” (www.statcan.gc.ca/concepts/definitions/economic_family-familles_economiques-eng.htm)

16

For Canadians overall (which includesimmigrants and the Canadian-born), Census data showthat just over 16% of household pre-tax income was spent on housing in both 2001 and 2006(Statistics Canada 2008). Although only observed at two time points, given how similar thesefigures are at both points in time, and how they more or less capture the beginning and end ofthe LSIC observation period, this figure will be used here as a rough benchmark for comparisonwith LSIC respondents. In Table 2-3 above, we see that immigrants spend far more on housingthan the national average (although, as we’ll see in Table 2-4, it is partly because they cluster inmore expensive urban markets). LSIC renters come closest to all residents over the observationperiod, with 26% of their income going to housing in the four years after they arrive in Canada.For owners, 32% of family income is spent on housing inwave

3, which represents a declinefrom earlier time points but still suggests that the average immigrant family spends a significantamount of their income when they choose to buy. In fact, everyone but renter atwave

Although the 16 percent figure for Canada overall includes those that own their homes without amortgage, data from the 2001 and 2006 censuses still suggest that immigrants shoulder muchheavier housing burdens than do Canadians overall. Although the 2001 and 2006 comparisonpoints do not align perfectly with LSIC data measurement points, the 2001 census figure forshelter lists renters at an annual cost of $7,932 and owners with a mortgage at $10,022, includingowners without mortgage (all figures in $2002), both lower than the comparable figures of $9,168and $18,516 reported by LSIC renters and owners at six months (calculated by multiplying themonthly costs for owners and renters by 12). By 2006, more than a year after

the collection ofLSICwave

3 data, the census reports housing costs among the general population of $7,922 forrenters and $10,742 for owners, compared to $8,892 and $17,928 for LSIC respondents atwave

As mentioned earlier, one partial explanation for the much higher than average shelter costsamong LSIC respondents is the fact that many of them live in Canada’s most expensive housingmarkets. This is no doubt true, but it is instructive to note that income for immigrants in LSICare also well below the Canadian average, so it is unlikely that income differentials absorb thesehigh shelter costs by location. Consider that in 2000 average income for Canadian householdswas $63,613 (or $5,301 per month) and $67,351.55 (or $5,613 per month) in 2005, considerablyhigher than the values shown for LSIC renters and owners in Table 2-3. In the section below, thenational differences above are further broken down into regional variations.

2.4.

Dohousing costs vary by location?

The period in which the LSIC immigrants are followed, 2001-2005, was marked by dramaticchange in many of Canada’s metropolitan housing markets. As Figure 1-3 shown in part one ofthis report illustrates, average prices in Toronto increased by at least $50,000 in just four years. InVancouver, the Real Estate Board of Greater Vancouver reports that the 2001-2005 increase was

These changes appear to have impacted affordability for many. According to a report by StatisticsCanada, 31.7% of Toronto residents and 30.4% of

Vancouverites spend at least 30% of theirincome on shelter costs (Luffman 2006). This figure is for owners and renters combined, butdoes show that although more immigrants face an affordability crunch, they are not alone in theirconcerns in these expensive cities.

3, this number had declined to less than 5%,suggesting that many newcomers do not believe that

they are spending an inordinate amount onhousing. As a result, immigrants,

like the Canadian-born,

face different housing options based onwhere they live. Furthermore, given how quickly price appreciation occurred in these regions,newcomers who came before a price increase would likely have found both rental and ownedhousing to be more affordable than those that arrived after the increase.

Table 2-4 shows that LSIC respondents in some cities experienced much higher increases inshelter costs over time relative to others. Montreal and Winnipeg had the lowest shelter costs forthe observation period for LSIC respondents at all time points, and it is Toronto and Calgarywith the highest shelter costs across the observation period.

Comparing LSIC respondents to other residents in each CMA (the numbers in brackets), we seeseveral instances of newcomers paying more for shelter than anyone else atwave

1 (CMAmedians for the entire population are listed in brackets each time). This is particularly true in“Other CMAs” and rural areas. Bywave

3, all LSIC respondents are outspending their otherCMA counterparts, with immigrants in rural areas continuingto spend more than double theamount on housing that other rural dwellers spend.

Looking at change within CMAs, although LSIC respondents saw increases in shelter costs in allregions, the increase was especially striking in Calgary and Edmonton, at roughly $360 (42%) and

13

www.rebgv.org/

18

$330 (47%), respectively. On the low end, LSIC respondents in Vancouver ‘only’ saw a $114(13.9%), and Winnipeg a $88 (16.3%), increase in shelter costs between 2001 and 2005. For allresidents in a CMA, the increases are much smaller interms of percent increase, and vary from$16 (2%) in Vancouver to $88 (13%) in Edmonton.

The connection between growing rates of ownership and shelter costs, although certainly notperfect, is evident in most cities. For example, Calgary and Edmonton, the

CMAs with the largestincrease in shelter costs, see 45 and 36 percentage point increases in homeownership between2001 and 2006. At the same time, Vancouver also sees a sizeable and similar increases inownership (~30 points), but it has the lowest rateof increase in shelter costs betweenwaves 1and 3, at 13.9 percent.

Table2-5:

Median shelter costs ($2002) for owners and renters, LSICwaves 1-3

CMARenterOwnerR/ORenterOwnerR/ORenterOwnerR/OMontreal5141,0160.515541,1190.495901,1400.52Ottawa/Hull8121,3290.617771,4710.537551,4620.52Toronto9201,7400.539481,5690.609131,6870.54Winnipeg5259090.584969280.535249460.55Calgary7621,5400.497051,4620.486561,4010.47Edmonton6111,2710.486051,2680.486301,2920.49Vancouver7701,6210.487361,4590.507151,4970.48Other CMA6491,4340.456351,2630.506331,3900.46Rural7161,0160.717801,0580.746551,0150.64Average7641,5430.507761,4620.537411,4940.50Source: Longitudinal Survey of Immigrants to CanadaNote: R/O denotes the ratio of rental to ownership costs. All values are in 2002 dollars.6 Months2 Years4 Years

Table 2-5 shows that in most cases, renting typically costs roughly half of what owning does.Note that the stark differences in the price of owning a home are also evident in the rentalmarket, where immigrants paid as much as $920 per month at six months to rent in Toronto andas little as $514 to rent in Montreal. Over the observation period, Toronto remains the mostexpensive CMA for rent, and Montreal is surpassed by Winnipeg for inexpensive rent. Althoughrent usually costs about half of what owning does for LSIC respondents, the price trends do notalways follow one another. Over time, the cost of owning increased in four CMAs but only twoCMAs saw an increase in rent (Montreal and Edmonton), and in two places (Ottawa/Hull andWinnipeg), the cost of owning went up alongside a drop in the price of rent.

As with Canadian trends overall, one potential explanation for the changes between

cities overtime is that some regions provided greater employment opportunities for newcomers, which thentranslated into an increase in housing expenditures. In Alberta, for example, unemployment ratesfor recent immigrants in recent history have been nearly half of what they were in other parts ofCanada (Alberta Employment and Immigration 2008), suggesting that a greater proportion ofnewcomers to Alberta may be able to choose to own versus rent compared to those that settledin other parts of Canada. This, of course, assumes that immigrants are making enough money toafford adequate housing, which once again points to the utility of comparing housing costs toincome (Tables 2-6 and 2-7).

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Table2-6:

Medianshelter costs ($2002) for renters, LSICwaves 1-3

CMARental CostIncomeR/IRental CostIncomeR/IRental CostIncomeR/IMontreal5141,0160.515541,7350.325902,2980.26Ottawa/Hull8121,2470.657772,1620.367552,3880.32Toronto9201,2790.729482,8000.349133,1360.29Winnipeg5251,5860.334962,0980.245242,2100.24Calgary7621,6500.467052,4250.296562,5050.26Edmonton6111,6320.376052,4050.256302,4500.26Vancouver7701,3310.587362,4320.307152,9010.25Other CMA6491,5210.436352,1000.306332,3450.27Rural7162,4760.297803,4110.236553,5100.19Average7641,2780.607762,5450.307412,8610.26Source: Longitudinal Survey of Immigrants to CanadaNote: R/I denotes the ratio of rental costs to income. All values are in 2002 dollars.6 Months2 Years4 Years

Turning first to renters(Table 2-6), there is a clear trend of rising incomes operating alongsiderelatively stable rental costs in nearly every city, thereby increasing affordability. The droppingrent-income ratio suggests that many immigrants are choosing to rent even when their incomeincreasingly provides them with the option to buy.

That said, newcomers do appear to earmark a significant portion of their income for housing intheir early years in Canada, particularly shortly after arrival. Although this is true in all CMAs,

it isparticularly the case in Toronto, where respondents report spending over 70% of their medianincome to afford their dwelling inwave

1. However, this is short lived, and bywave

2 Torontorespondents are spending 34% of their income on housing, slightly less than their Ottawa/Hullcounterparts. There is substantial improvement in all metropolitan areas, with immigrantsspending an average 26% of their median income on rent. By the thirdwave, all but one arebelow 30%, and the one that remains above(Ottawa/Hull) is only slightly above the threshold.

In some ways, the ratio of rental costs to income could be considered misleading, since theincome data does not include savings, which might be a major component of how respondentsand their families afford housing in their early years. Furthermore, the income data in LSICincludes respondents that did not report earning any income. This is particularly the case forToronto, where nearly 400 respondents reported no income whatsoever. The decision to includethem in the calculations above stems from the fact that housing is a necessity regardless ofincome or employment, and that it is informative to include these respondents in all calculations.

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Table2-7:

Median shelter costs ($2002) for owners, LSICwaves 1-3

CMACosts to OwnIncomeO/ICosts to OwnIncomeO/ICosts to OwnIncomeO/IMontreal1,0162,1090.481,1194,2800.261,1404,8340.24Ottawa/Hull1,3293,8450.351,4715,6520.261,4625,4620.27Toronto1,7402,5670.681,5694,0490.391,6874,5060.37Winnipeg9092,4560.379283,7400.259464,1170.23Calgary1,5403,1130.491,4624,5890.321,4014,7680.29Edmonton1,2713,0740.411,2684,2630.301,2924,8050.27Vancouver1,6212,4560.661,4593,1660.461,4973,9570.38Other CMA1,4343,4550.421,2634,4540.281,3904,7990.29Rural1,0163,1760.321,0584,1610.251,0154,7320.21Average1,5432,8710.541,4624,0650.361,4944,6340.32Source: Longitudinal Survey of Immigrants to CanadaNote: O/I denotes the cost of owning relative to income. All values are in 2002 dollars.6 Months2 Years4 Years

Turning now to owners

(Table 2-7), a declining proportion of income dedicated to housing costsis also evident for this group over time. Inwave

1, owners spend over half of their income onshelter, but as with renters this amount declines dramatically, so that bywaves 2 and3 theproportion shrinks to roughly 1/3. These rapid declines are evident in all CMAs, but areespecially pronounced in the ‘big three’ CMAs of Montreal, Toronto, and Vancouver, plusCalgary, largely because of the high costs for households six months after arrival.

Toronto and Vancouver’s housing markets appear to be especially gruelling for newcomers, asthey have some of the highest priced housing, and some of the lowest income levels. Yet, a largemajority of immigrants choose to live in these two regions even though it means that, on average,they can expect to have pronounced affordability issues if they choose to own. So great is theproportion of immigrants in these two regions that the total owner/income ratio indicates anaffordability crunch forallwave

3 respondents, even though it is only Toronto and Vancouverwhere respondents report spending more than 30% of their income on their owned dwelling.

2.5.

Variations acrossvisible minority groups

Up to this point, we have largely looked at immigrants as a homogenous group, distinguishedonly by their housing tenure status or the housing market they live in. In the remainder of thissection we will move beyond this assumption of immigrant homogeneity and begin to focus ondifferences across subgroups. First, we explore differences across visible minority groups,followed by variations across admission categories, region of origin, education and age.

1, it is Koreans, South Asians, and West Asians thatspend the most, whereas bywave

3 all groups but Arabs and Blacks are spending as much as thewave

1 big spenders.

These differences acrosswaves show that different residential trajectories across groups alreadyexist in the first four years after arrival. Some groups, like Arabs and Blacks, maintain low sheltercosts across the four-year period, whereas most other groups increase their expenses considerablyover this short time frame. Koreans, while having the highest expenses initially, only increasetheir expenses by about $150, yet they almost have a fourfold increase in ownership rates. Formost other groups, shelter costs rise alongside increases in ownership. This is true even for Arabsand Blacks, althoughwave

3 homeownership rates remain below those of all other groups.

There is wide variation in what each group pays for housing at all points in time, and one of themajor explanations for this disparity could be location15, and this prospect will be investigatedmore closely in the regression results presented later.

The most obvious explanation for the variation is that some groups move in to homeownershipfaster than others, and that they encounter the higher housing costs that accompany thetransition. Table 2-8 supports this assertion, with Blacks and Arabs posting the lowesthomeownership rates of any group at all time points (excepting West Asians inwaves 1 and 2).Similarly, most of the groups that spend a lot on shelter also have the highest levels of ownershipacross the board (Koreans inwave

1 are a noteworthy exception to this). Further evidence ofdifferent residential trajectories can be seen by looking at the rates of increase over time. Somegroups, like South Asians andFilipinos, experience more than 30 percentage point increases inrates of ownership between 2000/2001 and 2004/5. Not surprisingly, it is many of the groupswith the greatest increase in ownership rates that see the greatest increases in shelter costs.

14

‘Visible Minority’ is a term constructed by the Employment Equity Act of Canada and is intended to denotepersons, other than Aboriginal peoples, who are non-Caucasian in race or non-white in colour.

15

There are in fact many competing explanations, andthese tables could be sub-divided many different ways. Forbrevity, only differences across one characteristic at a timeare